[CTC] Senators poised for close currency vote

[Arthur Stamoulis]

POLITICO
Senators poised for close currency vote
By Doug Palmer 

5/20/15 7:50 PM EDT
Finance Committee leaders scrambled Wednesday to peel off support for a popular anti-currency manipulation amendment that they say threatens trade promotion authority legislation President Barack Obama needs to complete his landmark Trans-Pacific Partnership pact.

“I think I can boil this very complicated issue down to a single point: The Portman-Stabenow amendment will kill TPA,” panel Chairman Orrin Hatch said on the Senate floor. “Put simply … it will very likely kill TPP as well.”

The moment of truth for the proposal could come Thursday as senators continue to seek votes on amendments, which would cap years of pressure by Ford Motor Co. and other Detroit-based automakers on the White House to include enforceable rules against currency manipulation in trade agreements. They say the rules are needed because Japan has a history of deliberating undervaluing its currency to gain an unfair export advantage and make it more expensive for Japanese consumers to buy foreign cars.

The administration has resisted, arguing enforceable rules could backfire on the United States by exposing Federal Reserve action to stimulate the U.S. economy to possible trade sanctions. They also argue the move would undermine successful diplomatic efforts to prod Japan, China and other countries not to intervene in currency markets for a trade advantage.

The amendment’s authors, Sens. Rob Portman (R-Ohio) and Debbie Stabenow (D-Mich.), say they have carefully crafted their amendment to protect U.S. monetary policies from trade retaliation. But U.S. Treasury Secretary Jack Lew warned Tuesday he would recommend Obama veto the trade promotion authority bill if it includes the Portman-Stabenow provision.

“An enforceable currency provision in our trade agreements could give our trading partners the power to challenge legitimate U.S. monetary policies needed to ensure strong employment and a healthy robust economy, an outcome we would find unacceptable,” Lew said in a letter.

The debate pits Portman, a former U.S. trade representative under President George W. Bush, against Hatch, Senate Majority Leader Mitch McConnell and House Speaker John Boehner.

“I think the Department of Treasury under the four presidents I’ve served with has done a very good of working with our allies around the world when some of these currencies get — in some peoples’ minds — out of line,” Boehner told reporters last week. “I think that’s a much better approach than trying to legislate what should or shouldn’t happen with currency valuation.”

But Portman and Stabenow have plenty of allies as well. Sixty senators signed a letter in 2013 asking Obama to include “strong and enforceable foreign currency manipulation disciplines” in the proposed TPP pact, which would include the United States, Japan and 10 other countries covering nearly nearly 40 percent of world economic output.

The signatories included Finance Committee ranking member Ron Wyden and 50 other senators who still are in office — just enough to win approval for the Portman-Stabenow provision. But Wyden has joined with Hatch to offer an alternative amendment to bleed votes away from the measure opposed by the White House.

“It certainly gives [senators] an alternative that makes more sense than the Portman-Stabenow amendment because that can get us into real trouble,” Hatch told reporters. “They say they’ve solve the monetary problem, but they haven’t. … I hope we can beat the Portman amendment, the Portman-Stabenow amendment. And keep in mind, I’m his best friend.”

Portman, who faces a tough reelection battle next year, comes from a state that long has been sensitive to international trade. But 10 years ago at USTR, he tread carefully on the currency issue in deference to the Treasury Department, which has historically taken the lead on the matter.

“Yes, I had to be [deferential],” Portman told reporters Wednesday, recalling that once when he mentioned his concerns before the Senate Finance Committee “I was literally called on my back to USTR by Treasury saying you’re not allowed to talk about currency. So I understood. I dutifully stopped talking about it.”

Both the TPA bill as currently written and the Hatch-Wyden amendment hold out the possibility that the United States could negotiate “enforceable rules” against currency manipulation in trade agreements. But the Portman-Stabenow provision goes one step further by requiring those rules be “subject to the same dispute settlement procedures and remedies as other enforceable obligations under the agreement.”

Those are the words that make Treasury and White House officials worried that Federal Reserve decisions that indirectly drive down the value of the dollar could be exposed to retaliatory trade sanctions.

But Portman said they’ve addressed that concern by calling for rules consistent with existing principles and agreements of the International Monetary Fund and the World Trade Organization and by explicitly stating in the amendment that it’s not intended to restrict the exercise of domestic monetary policy.

Sherrod Brown, a co-sponsor of the amendment, said he was confident they would get the 51 votes needed for approval.

“That’s why the White House is so concerned about it and people like Hatch and Wyden are so concerned about it,” the Ohio Democrat told reporters during a conference call.

Portman stopped short of declaring victory, but said he believed Hatch and Wyden “know their position is not sustainable. How can you be adamantly against currency manipulation but not want it to enforceable? Their amendment does not have the courage of its convictions. I think that’s their concern.”

Still, nearly 40 agricultural and business groups — including the Business Roundtable and the U.S. Chamber of Commerce — endorsed the Hatch-Wyden provision, saying in a letter to senators that it would “allow flexibility for U.S. negotiators to shape a first-time currency provision that parties to the Trans-Pacific Partnership and other trade agreements may be willing to accept” without jeopardizing chances of concluding the deals.

Wyden drove home the same theme on the Senate floor. “This amendment, in my view, strikes the right balance,” the Oregon Democrat said. “The Portman amendment unfortunately throws that balance out of whack.”
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://lists.citizenstrade.org/pipermail/ctcfield-citizenstrade.org/attachments/20150520/914b9a04/attachment.htm>